The federal indictment of executives and physicians charged in a $200 million bribery and kickback scheme at a ritzy Dallas-based hospital signals the U.S Justice Department remains hungry for holding people liable for widespread healthcare fraud.
It shows the federal government is “not only going to look for corporate responsibility but individual liability as well,” said Troy Barsky, an attorney in the healthcare group at Crowell & Moring in Washington. The indictments also reinforce long-standing questions surrounding the potential for self-dealing practices at physician-owned facilities.
A grand jury charged 21 people affiliated with the now-bankrupt, physician-owned Forest Park Medical Center for allegedly paying or taking bribes and kickbacks in exchange for referring patients to the hospital.
Top-level executives and doctors set up shell companies to funnel millions of dollars in bribes to surgeons, primary-care physicians, lawyers, workers' compensation specialists and others in exchange for patient referrals to the hospital, according to the Justice Department's announcement.
During the four-year scheme, which lasted from 2009 to 2013, Forest Park Medical Center paid out about $40 million in kickbacks in exchange for referrals. The hospital ultimately billed those patients' insurance plans, including Medicare and Medicaid, more than a half-billion dollars and collected $200 million.
The individuals involved—from the owners down to the center's referral coordinator—are each charged with conspiracy to pay and receive bribes. The maximum penalty is five years in federal prison and $250,000 in fines. The founders are also charged with various other crimes, such as violating the federal anti-kickback statute and conspiracy to commit money laundering. A conviction could also lead the founders to forfeit property connected to any bribe payments.
The Forest Park Medical Center indictment comes on the heels of several other high-profile cases where top healthcare executives were held personally responsible for illegal acts committed at their facilities.
U.S. Deputy Attorney General Sally Quillian Yates announced last year the Justice Department would be gunning for the accountability of people involved in wrongdoing as a way to combat corporate misconduct. The so-called “Yates memo” served as a wake-up call to healthcare executives that the Justice Department would be stepping up efforts.
“They're very aware of potential personal culpability, which is the intention of the government,” Barsky said.
The Forest Park Medical Center case also gives ammunition to critics of physician-owned hospitals, who argue the model is ripe for potential abuse. This indictment could “add fuel to their fire,” Barsky said.
The Affordable Care Act prohibited the construction of new physician-owned hospitals and expansion of existing facilities, unless they get permission from the CMS.
The now-shuttered Forest Park Medical Center was an out-of-network hospital, which allowed it to set high prices for services. The patients referred to the hospital through alleged bribes and kickbacks were those whose private or government-funded insurance plans had high reimbursement rates for out-of-network procedures. The hospital, which was founded in 2009, maximized profit for its physician investors by refusing to join health plan networks and instead “allowing its owners and managers to enrich themselves through out-of-network billing and reimbursement,” the Justice Department said.
The hospital's owners and employees also attempted to sell patients with lower-paying Medicare and Medicaid to outside facilities in exchange for cash.
A 2015 story by D Magazine in Dallas described Forest Park Medical Center as a luxury hospital chain with amenities modeled after a Ritz-Carlton hotel. Millions of dollars were spent by the owners to add spa-like features, a 40-foot-wide fountain and original art. Owners even made sure the smell of fresh linens wafted through the facility.
Physicians were encouraged to invest shares worth up to $250,000 for the different hospital locations throughout Texas and in a suburb of Kansas City, Kan., D Magazine reported. The assets of the Dallas hospital have since been purchased by hospital chain HCA.
Forest Park Medical Center was co-owned by anesthesiologist Dr. Richard Ferdinand Toussaint Jr., 58, who is awaiting sentencing for a conviction handed down in March in another healthcare fraud case. In that case, Toussaint was convicted of submitting false claims to Aetna, Blue Cross and Blue Shield of Texas, Cigna Corp., Humana, UnitedHealthcare and the Federal Employees Health Benefits Program. He faces a maximum penalty of 10 years in prison and a $250,000 fine on seven counts of healthcare fraud.